Edwards v. Belknap

166 P.2d 451, 66 Idaho 639, 1946 Ida. LEXIS 156

• Court: Idaho Supreme Court
• Decided: February 18, 1946
• Docket: No. 7250.
• Status: Published

Opinions

BUDGE, J.

Originally this action was brought in the name of John Edwards and Mary Edwards, his wife, to cancel and set aside a deed given by them conveying their one-half interest in certain mining property to the Baltimore Trust, a common law trust formed in the State of Idaho and unincorporated. John Edwards died prior to the trial, Mary Edwards is the administratrix of her husband’s estate, and maintains this action in her trust capacity and individually. Briefly stated, the pertinent facts are substantially as follows:

June 13, 1942, John and Mary Edwards executed and delivered a quit-claim deed to certain mining property to the Baltimore Trust and received from Belknap and Williams, mentioned in the Declaration of Trust as trustees, a certificate for two units in the alleged Trust, said Trust being the owner of other mining properties in Blaine County, which claims were being operated by the Baltimore Trust, namely, the Ida Harlan, the Minnie May, the Victoria and the Baltimore and the Baltimore Extensions 1, 2 and 3, the Baltimore number 2, number 3 and number 4, as well as the Lucky Coin Group of seven claims, which was the consideration paid to, and received by, Mr. and Mrs. Edwards upon the execution and delivery of the deed in question, and that the certificate delivered to them was not at said time, nor thereafter, valueless. The deed was executed and delivered, and filed in the office of the County Recorder of Blaine County, said Declaration of Trust having been filed in said office prior thereto.

The Baltimore Trust has never been incorporated under the laws of the State of Idaho or elsewhere, and has never complied with the provisions of sec. 25-1616, I.C.A., by submitting to the Inspector of Mines, or filing with said Inspector, a report as required by the above mentioned section.

Misrepresentation and undue influence, constituting fraud, are alleged to have been made by respondent Williams to the Edwardses in order to obtain the deed herein involved. However, the trial court found adversely to appellants as to the alleged misrepresentations and fraud pled in the complaint. It is conceded by appellants there is conflict in the testimony upon the question of misrepresentation and fraud, the court having found there were no false representations made by Williams, nor undue influence used by him to secure the execution of the deed or the delivery of the same; that the consideration paid to the Edwardses for the mining property was not valueless. Furthermore, it appears from the record that the Edwardses voluntarily executed and delivered the deed in question, and delivered possession of the mining property to the grantees named in the trust; that the grantees, relying upon the deed, expended between twenty and twenty-five thousand dollars in the development of the mining property; that John Edwards and his wife visited the mine during the progress of the work, and upon one occasion John Edwards entered the mine where the work was being carried on and stated to Plugoff and Williams, who accompanied him, in substance and effect, (said evidence being admitted without objection) that “he (Edwards) was impressed with the work and said it was the kind he would do and exactly the kind he would do to get the ore. And he was very much surprised that we hadn’t encountered ore up to that time,” and said, “If you keep along you won’t go much further until you are bound to hit this ore.” “Now I am very pleased with everything.” At another time he said, “I made up my mind to go in with you fellows (Belknap and Williams) * * * McFadden has always handled my business * * * We’ll go down and have him draw the deed, and I’ll sign it.” “There will be no more law on this. I am very satisfied.” The record is replete with evidence to the effect that the Edwardses, when the deed was executed and delivered, had. full knowledge who the purchasers were, that they were the trustees designated in the Declaration of Trust. Mr. McFadden, who prepared the deed, stated to the Edwardses, “Do you realize that when you sign a quit claim deed that you must know what you are doing, because if you sign a quit claim deed you lose your right, title and interest to that property.”

No other conclusion can be reached from the record than that the Edwardses executed and delivered the quitclaim deed with the intention of conveying their right, title and interest in and to the mining property to the Baltimore Trust, represented by the trustees named in the Declaration of Trust. Furthermore, with full knowledge that the trustees, relying on the deed, intended to and did expend large sums of money with the acquiescence, encouragement and approval of the grantors.

The cause was tried before the court without a jury, resulting in a decree in favor of respondents to the effect that appellants take nothing as against respondents, from which decree this appeal is prosecuted.

There are but two questions presented upon this appeal:

“First, that the Baltimore Trust is and at all times was as a matter of law, a corporation, but was never incorporated as a corporation either under the laws of the State of Idaho or elsewhere, and has never filed in the office of the Secretary of the State of Idaho any articles of incorporation and no corporate charter has ever been issued to it, and further that it has never been authorized to do business as a corporation in the State of Idaho, for which reasons the plaintiffs contend that the deed given by them to said Baltimore Trust is, and at all times has been, null and void.

“Second, it is the contention of the plaintiffs that the Baltimore Trust has never submitted any report to the Inspector of Mines of the State of Idaho or filed with said Inspector any report as required by the provisions of Section 25-1616, Idaho Code Annotated (1932), or otherwise, and has never complied with any of the provisions of said statute, for which reason it is not and never was entitled to engage in business or transact business in the State of Idaho, by reason of which the deed given to it is, and all' times has been, null and void.”

Respondents, in their answer, affirmatively allege:

“That the plaintiffs were aware of the fact that the defendant, Baltimore Trust, has made large expenditures and has done a great deal of development work upon the Lucky Coin Group under the deed made, executed and delivered by plaintiffs to the Baltimore Trust, and solely upon the rights of possession given under said deed; that by reason of their knowledge, of acquiescence in and encouragement in the doing of development work upon the said Lucky Coin Group under said deed, the plaintiffs have been and are estopped from claiming that the said deed is null and void.”

The findings of the court below are to the effect that appellants were estopped from questioning the validity of their deed because of claimed status of respondents.

If, under the facts and circumstances of this case, appellants are estopped from questioning the validity of their deed or the status of the respondents, other questions presented become immaterial.

“The gist of an estoppel is that the person against whom it is urged shall have so conducted himself so as to lead the person urging it to act in a particular manner to his disadvantage.” (Laberee v. Laberee (Ore.), 228 P. 686.)

“The essence of the doctrine of estoppel is that where a person does or omits to do something which influences the action of another, who relies and acts thereon, equity will not permit him to controvert the same to the injury of the other party.” (Parmely v. Showdy, 148 N.Y.S. 1086.)

“Estoppel arises when one party by representation induces another to change position to his detriment.” (Blaisdell Automobile Co. v. Nelson (Me.), 154 A. 184.)

To hold in the case at bar that the principle of estoppel is not applicable to the facts herein would result in reinvesting in appellants the mining property conveyed by them to respondents, together with the benefit of the expenditures in the development of the property in an amount between twenty and twenty-five thousand dollars, said expenditures being made as and in the same manner as would have been made by appellants in the development of the mine. Appellants do not seek to reimburse respondents for the vast expenditures made by them in reliance on their deed, or otherwise, but, on the contrary, with full knowledge acquiesced in and encouraged respondents in making expenditures, etc., and now seek to profit thereby.

The following rule is stated in 8 Fletcher Cyclopedia Corporations, chap. 46, sec. 3958:

“A person who conveys real property to an association as a corporation cannot avoid the conveyance by denying the corporate existence of the grantee * * *”

There are authorities to the effect that no one could assert that a common law trust was illegal or complain o'f its assuming the exercise of corporate powers except the state. (Hodgkiss v. Northland Petroleum Consol. (Mont.), 67 P. (2d) 811; Haynes v. Central Business Property Co. (Wash.), 249 P. 1057.) All trusts are not illegal and thus prohibited as a matter of law.

Conceding that while the trustees named in the Declaration of Trust may not be said to be technically an association or legal entity, the principle of law announced is applicable. Appellants executed and delivered their deed, were paid a valuable consideration, placed appellants in possession, made no objection to the large expenditures that were being made by respondents relying upon their deed, it would, therefore, seem clear that they are not now in position to question the status of respondents or their availability to take title to said property.

It would seem that where there is a conveyance of real property to an association or to a trust where the trustees are definitely identified, that the principle of estoppel applies. (Hodgkiss v. Northland Petroleum Consol., supra.)

Appellants strenuously contend the deed is void in that the grantee was, in law, a corporation “but was never incorporated as a corporation either under the laws of the State of Idaho or elsewhere, and has never filed in the office of the Secretary of the State of Idaho any articles of incorporation and no corporate charter has ever been issued to it, and further that it has never been authorized to do business as a corporation in the State of Idaho”; that the only grantee named was the Baltimore Trust.

In the Declaration of Trust Belknap and Williams set forth an agreement between themselves where they adopted or designated the name of the grantee as the name of the trust created by the declaration. It is very well stated in 19 B..C.L., p. 1833, as follows:

“Again, a contract or obligation may be entered into by a person by any name he may choose to assume. All that the law looks to is the identity of the individual, and, when that is ascertained and clearly established, the act will be binding on him and on others.”

This rule appears to be universal. (Hodgkiss v. Northland Petroleum Consol., supra.)

In Sears on Trust Estates & Business Companies (2d Ed.) p. 874, it is said:

“Strictly speaking, it may be said that a trust cannot adopt a name. It has no power to do anything implying either volition or dissent. It is merely property with a characteristic attached to or inhering in it. But trustees, who represent it, are individuals sui juris, and they may adopt a name or names for transacting business, executing contracts, or suing and being sued.”

A deed is sufficient if the grantee can be identified by extrinsic evidence. (York v. Stone (Wash.), 34 P. (2d) 911.)

The trustees of the defendant trust were parties to the agreement. They were identified persons. Appellants had knowledge of the Declaration of Trust, it had been duly filed in the office of the County Recorder of Blaine County; they knew they were conveying the mining property by deed to the Baltimore Trust named therein, and to the trustees of said Trust, Belknap and Williams.

In the instant case appellants take the position, as we understand it, that they conveyed the mining property by solemn deed to identified parties, were paid the consideration, placed respondents in possession, stood by without objection during the vast expenditures heretofore referred to and, at the same time, contend that respondents are a corporation by reason of recitals in the Declaration of Trust, and not having filed articles of incorporation or received a charter, the deed was void ab initio and should be set aside and appellants reinvested with the title to the property, restored to possession, and enjoy the fruits of the moneys expended in the development of the property. To so hold would be inequitable, even though it be conceded, which we do not decide, that the Baltimore Trust is a corporation, and had not complied with the statutes authorizing it to do business within the state. If a corporation in law, appellants dealt with it as such. If a common-law trust, represented by trustees, appellants dealt with individuals sui juris, and are thereby estopped.

In 7 C.J.S., sec. 5, p. 25, the general rule of estoppel is stated as follows:

“One who deals with an association as a legal entity capable of transacting business, and in consequence receives from it money or other things of value, is estopped from denying the legality of its existence.” (12 C.J.S., sec. 31, pp. 846-7; Petty v. Brunswick etc. Ry. Co. (Ga.), 35 S.E. 82; General American Oil Co. v. Wagoner Oil & Gas Co. (Okla.), 247 P. 99.)

In Seeley v. Security National Bank, 40 Ida. 574, 583, 235 P. 976, quoting from the Supreme Court of the United States in Swain v. Seamens, 9 Wall (U.S.) 254, 19 L. ed. 554, the following language is used:

“ Where a person tacitly encourages an act to be done, he cannot afterwards exercise his legal right in opposition to such consent, if his conduct or acts of encouragement induced the other party to change his position, so that he will be pecuniarily prejudiced by the assertion of such adversary claim.’

“This court has approved of this doctrine in the following cases: Leaf v. Reynolds, 34 Ida. 643, 203 P. 458; Exchange State Bank v. Taber, 26 Ida. 723, 145 P. 1090; Farber v. Page & Mott Lumber Co., 20 Ida. 354, 118 P. 664. See, also, Shafer v. Killpack, 53 Utah 468, 173 P. 948; Lillard v. Board of County Commissioners, 102 Kan. 822, 172 P. 518.”

Estoppel to question or object to a thing done or a position taken by another may arise from express consent thereto, as well as by acts and conduct. This rule has been applied in numerous instances to preclude the consenting party from asserting the invalidity or avoiding the consequences of acts which were beyond the legitimate and rightful powers of the parties acting when done pursuant to, or in reliance upon, such consent. In the instant case respondents could not maintain an action to declare the deed void and recover the consideration paid therefor, although conceding its lack of qualification to do business. Both parties having consented to and consummated the transaction here involved, each would be estopped from asserting the invalidity or avoiding the consequences of their acts. (Ferguson Fruit & Land Co. v. Gooding, 44 Ida. 76, 85, 258 P. 557.)

19 Am. Jur., sec. 57, p. 668, in discussing the principle of estoppel announces the following rule:

“The courts are especially disposed to uphold a claim of estoppel by silence or inaction where one party with full knowledge of the facts has stood by without asserting his rights, or raising- any objection while the other party, acting on the faith of such apparent acquiescence, incurred large expenditures which will be wholly or partially lost if such rights or objections are subsequently given effect. This principle finds frequent application in respect of improvements and expenditures upon real property under a claim of right.”

Clearly respondents would not have made the large expenditures heretofore referred to or performed the labor incident to the development of the mine in the absence of the deed given to it, and the encouragement and acquiscence of appellants.

In Murtaugh Highway Dist. v. Twin Falls Highway Dist., 65 Ida. 260, 142 P. (2d) 579, it is said:

“Where a party by conduct has intimated that he consents to an act which has been done or will offer no opposition thereto, though it could not have been lawfully done without his consent, and he thereby induces others to do that from which they otherwise might have abstained, he cannot question the legality of the action to the prejudice of those who have acted on the fair inference to be drawn from his conduct. (Exchange State Bank v. Taber, 26 Ida. 723, 145 P. 1090, 1094. * * * Leaf v. Reynolds, 34 Ida. 643, 203 P. 458.”

Having disposed of the first assignment of error, it becomes unnecessary to discuss the second assignment since the same principles of law are involved.

The only logical disposition of this case is to hold that appellants are estopped to" raise the questions urged upon this appeal, and that the judgment of the trial court be sustained, and it is so ordered. Costs to respondents.